- What I Wish Ben Bernanke Knew About Japan
- The Real Housewives of Japan: Shopping for Bargains … Driving Deflation?
- History Says Lost Decade For Stocks Should Lead to a New Bull Market … But Will It?
- How to Profit in Any Kind of Market
- Hidden Traps Make Bank Stocks a Bad Deal
- U.S. Making Same Mistakes that Led to Japan’s Lost Decade, Say Analysts
- The Lost Decade: How the U.S. Financial Crisis Resembles Japan's Ten Years of Misery – And How to Play it
As farfetched as that sounds, it's become a major cause for concern in this nation of 128 million, which has been in an economic funk for two decades. These "real housewives" are part of a user-driven, social-networking site called Mainichi Tokubai, which delivers the best prices on specific grocery-store items to the fingertips of Tokyo-region consumers.
To hear frustrated Japanese policymakers and retail executives tell it, these bargain-minded consumers and their equally frugal social-networking site is almost-single-handedly undercutting the Japan's economy.
"We understand consumers want the best deals," Japan Chain Stores Association executive Shoichi Ogasawara groused to CNN's Kyung Lah. "And we understand that the social-networking site is a natural extension of consumer behavior in the Information Age. But supermarket prices have fallen for 13 years in a row in Japan," and sites such as this are making it difficult to reverse that trend.
Don't make the mistake of believing that something similar couldn't happen here in the U.S. market. Given that Japan's consumer technology tends to be anywhere from 18 months to two years ahead of U.S trends, this could be a preview of what's to come for the badly troubled U.S. economy.
I cite this bit of music trivia in an investment story for two reasons: First, the name of the band fairly well describes the conditions attached to the stock market's historically sad performance over the just-completed decade. Specifically, a lot of blood, sweat and tears - thankfully followed by a tiny bit of healing in the final eight months of 2009.
Second, for those more attuned to mathematical theory than music, the market results for the 10 years from 2000 to 2009 provide the basis for a prediction for the coming decade - one essentially the inverse of the band's famous phrase. To be more precise, "what went down, must now come up."
That forecast is based on a fairly simple principle: Things that move in wave patterns - such as the stock market - have an overwhelming tendency to "revert to the mean." In other words, when stocks perform well above their long-term historical norm (known as the "arithmetic mean") for an extended stretch, they usually have to underperform for an extended period to get back in line with that long-term mean.
Conversely, when stock-market performance is well below the norm for a long stretch, it theoretically should enjoy an extended run well above the historical mean in order to bring the market's performance back in line with the long-term norm.
And the decade we've just completed was definitely far below that norm.
The prediction is also based on historical precedent, as demonstrated by past per-decade performances of the major stock market indexes.
And I'm not alone.
Just look at what some other big-name investors - each also known for their independent thinking - are saying or doing right now:
- Bond king Bill Gross is nervous and raising cash.
- Author, commentator and global-markets guru Jim Rogers has repeatedly said that he's not investing in stocks anywhere in the world right now.
- Hedge-fund heavyweight John Paulson is moving aggressively into gold.
- And investing icon Warren Buffett - never one known for tipping his hand - is candidly stating that the U.S. financial-crisis cleanup is far from complete. The fact that he's reportedly buying more shares of Korean steel dynamo Posco (NYSE ADR: PKX) would punctuate this point.
This kind of uncertainty can be paralyzing, making it tough to decide where - or even if - we should deploy our investments.
Fortunately, we've been here before. And what we learned will allow us to profit no matter what the financial future holds for the U.S. marketplace.